CONSUMERWATCH: Cellphone contract exit strategies

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Cellphone companies have notoriously charged large fees for cancellation, but with new legislation and a few tips from experts, it may be easier to get out of your cellphone contract than you think.

When Kaylynn Warren signed a three-year cell phone contract with MTS two years ago, she didn't foresee any reason why she might need to get out of it.

But recently Warren's husband was transferred for work. "We're moving to a part of Manitoba that doesn't have cell service," Warren said.

When Warren called MTS to see if she could get out of her contract, the company said she could, but she would have to pay a hefty cancellation fee.

"I either have to find someone to take it over or pay a $400 fee," Warren said.

Warren's experience isn't unique. After receiving numerous complaints, the Manitoba Government proposed legislation restricting companies from charging high cancellation fees to get out of contracts.

Under the new legislation costumers will only be required to "pay back" the subsidized cost of their handset. The legislation was introduced in May 2011 and is expected to be implemented this year.

Currently cellphone companies charge a fee for each remaining month in a contract. MTS charges $30 per month remaining on contracts, to a maximum of $400.

But MTS said they do review cases on an individual basis and also plan to comply with the new rules once they take effect. "We recognize that you might sign a contract today in good faith and life throws something at you," said Sylvie Houghton of MTS.

Rogers and Telus have also recently amended their cancellation policies to reflect the new guidelines laid out by the province.

"Really, if they want to change their phone or end their term, all they have to do is look at the unrecovered subsidy on the phone and pay that out," said Telus' Jim Johannson.

Another option is trying to negotiate with providers if a better deal is found elsewhere.

Customers can also get out of a contract early if their cell phone company notifies them of changes in the terms of their contract. After being notified of the changes, customers can cancel within 30 days for free.

Finally, cellphone users can transfer the contract to someone else for a small fee.

As for Warren, after CTV contacted MTS, they have agreed to release Warren from her contract and waive the $400 fee.

Warren said she's relieved but is wary of signing another long-term contract with a cellphone company.

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New cellphone legislation is expected to be in place later in 2012 in Manitoba.